[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Notices]
[Pages 81609-81611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32817]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76748; File No. SR-NYSE-2015-52]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving Proposed Rule Change to the Co-Location Services Offered by
the Exchange (the Offering of a Wireless Connection To Allow Users To
Receive Market Data Feeds From Third Party Markets) and To Reflect
Changes to the Exchange's Price List Related to These Services
December 23, 2015.
I. Introduction
On October 23, 2015, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') pursuant to Section 19(b)(1) \1\ of the Securities
Exchange Act
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of 1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule
change to amend the co-location services offered by the Exchange to
include a means for co-located Users to receive market data feeds from
third party markets through a wireless connection. The proposed rule
change was published in the Federal Register on November 12, 2015.\4\
No comment letters were received in response to the Notice. This order
approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 76374 (November 5,
2015), 80 FR 70021 (November 12, 2015) (``Notice'').
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II. Description of the Proposed Rule Change
The Exchange proposes to change the co-location services offered by
the Exchange to include a means for Users to receive market data feeds
from third party markets (the ``Third Party Data'') through a wireless
connection.\5\ In addition, the proposed rule change reflects changes
to the Exchange's Price List related to these co-location services.
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\5\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76008 (September 29, 2015), 80 FR 60190
(October 5, 2015) (SR-NYSE-2015-40). As specified in the Price List,
a User that incurs co-location fees for a particular co-location
service pursuant thereto would not be subject to co-location fees
for the same co-location service charged by the Exchange's
affiliates NYSE MKT LLC and NYSE Arca, Inc. See Securities Exchange
Act Release No. 70206 (August 15, 2013), 78 FR 51765 (August 21,
2013) (SR-NYSE-2013-59).
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The Exchange proposes to offer the wireless connection to provide
Users with an alternative means of connectivity for Third Party Data.
As the Exchange notes, wireless connections involve beaming signals
through the air between antennas that are within sight of one
another.\6\ Because the signals travel a straight, unimpeded line, and
because light waves travel faster through air than through glass (fiber
optics), wireless messages have lower latency than messages travelling
through fiber optics.\7\
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\6\ See Notice, supra note 4 at 70021.
\7\ See id.
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Under the proposed rule change, the Exchange would utilize a
network vendor to provide a wireless connection to the Third Party Data
through wireless connections from the Exchange access centers in
Secaucus and Carteret, New Jersey, to its data center in Mahwah, New
Jersey, through a series of towers equipped with wireless equipment.\8\
A User that chooses this optional service would be able to receive data
feeds from NASDAQ and BATS Exchange, Inc. over a wireless connection.
To receive Third Party Data, the User would enter into a contract with
the relevant third party market, which would charge the User the
applicable market data fees for the Third Party Data. The Exchange
would charge the User fees for the wireless connection for the Third
Party Data.\9\
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\8\ The NASDAQ Stock Market LLC (``NASDAQ'') offers a similar
wireless service. See Securities Exchange Act Release No. 68735
(January 25, 2013), 78 FR 6842 (January 31, 2013) (SR-NASDAQ-2012-
119) (approving a proposed rule change to establish a new optional
wireless connectivity for co-located clients).
\9\ A User would only receive the Third Party Data for which it
had entered into a contract. For example, a User that contracted
with NASDAQ for the NASDAQ Totalview-ITCH data feed but did not
contract to receive any other Third Party Data would receive only
the NASDAQ Totalview-ITCH data feed through its wireless connection.
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A User would be charged a $5,000 non-recurring initial charge for
each wireless connection and a monthly recurring charge (``MRC'') that
would vary depending upon the feed that the User opts to receive. If a
User purchased two wireless connections, it would pay two non-recurring
initial charges. The MRC for a wireless connection to each of BATS
Pitch BZX Gig shaped data, DirectEdge EDGX Gig shaped data, and NASDAQ
BX Totalview-ITCH data will be $6,000; the MRC for a wireless
connection of NASDAQ Totalview-ITCH data will be $8,500; and the MRC
for a wireless connection of NASDAQ Totalview-ITCH and BX Totalview-
ITCH data will be $12,000. The Exchange proposes to waive the first
month's MRC, to allow Users to test the receipt of the feed(s) for a
month before incurring any MRCs.
The wireless connections would include the use of one port for
connectivity to the Third Party Data. A User will only require one port
to connect to the Third Party Data, irrespective of how many of the
five wireless connections it orders. If a User that has more than one
wireless connection wishes to use more than one port to connect to the
Third Party Data,\10\ the Exchange proposes to make such additional
ports available for a monthly fee per port of $3,000.
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\10\ For example, a User with two wireless connections for Third
Party Data may opt to purchase an additional port in order to route
the options and equity data it receives to different cabinets.
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The Exchange represents that there is limited bandwidth available
on the wireless connection for data feeds from third parties. As a
result, the Exchange has decided to offer as Third Party Data only the
data feeds that are in high demand from Users. Although constrained by
bandwidth with respect to the number of feeds it can carry, the
Exchange represents that the wireless network offered by the Exchange
can be made available to an unlimited number of Users.
The wireless connection would provide Users with an alternative
means of connectivity for Third Party Data. Currently, Users can
receive Third Party Data through other methods, including, for example,
from another User, through a telecommunications provider, or over the
internet protocol (``IP'') network.\11\ In addition, Users can receive
Third Party Data from wireless networks offered by third party vendors.
The Exchange represents that there are currently at least four third
party vendors that offer Users wireless network connections using
wireless equipment installed on towers and buildings near the data
center. The Exchange states that its proposed wireless connection would
traverse wireless connections through a series of towers equipped with
wireless equipment, including a pole on the grounds of the data
center.\12\ The Exchange states that access to such pole or the roof is
not required for third parties to establish wireless networks that can
compete with Exchange's proposed service and, in particular, represents
that based on the information available to it, the proposed wireless
connection would provide data at the same or similar speed, and at the
same or similar cost, as existing wireless networks, thereby enhancing
competition.\13\
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\11\ The IP network is a local area network available in the
data center. See Securities Exchange Act Release No. 74222 (February
6, 2015), 80 FR 7888 (February 12, 2015) (SR-NYSE-2015-05) (notice
of filing and immediate effectiveness of proposed rule change to
include IP network connections).
\12\ See Notice, supra note 4 at 70023.
\13\ See Notice, supra note 4 at 70022-23.
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The wireless connection to the Third Party Data is expected to be
available no later than March 1, 2016. The Exchange will announce the
date that the wireless connection to the Third Party Data will be
available through a customer notice.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\14\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(4) of the Act,\15\ which
requires that
[[Page 81611]]
the rules of a national securities exchange provide for the equitable
allocation of reasonable dues, fees and other charges among its members
and issuers and other persons using its facilities, and with Section
6(b)(5) of the Act,\16\ which requires, among other things, that the
rules of a national securities exchange be designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, to protect investors and the public interest, and not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. In addition, the Commission finds that the
proposed rule change is consistent with Section 6(b)(8) of the Act,\17\
which requires that the rules of the exchange not impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of the Act.
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\14\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\15\ 15 U.S.C. 78f(b)(4).
\16\ 15 U.S.C. 78f(b)(5).
\17\ 15 U.S.C. 78f(b)(8).
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The Commission believes that the Exchange's proposal to provide
this additional connectivity option is consistent with the requirement
of Section 6(b)(5) of the Act. The Commission believes that the
proposal is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers because the Exchange makes
wireless connectivity available to all Users on an equal basis. All
Users that voluntarily select this service option will be charged the
same amount for the same services, and there would be no
differentiation among Users with regard to the fees charged for the
service. Further, the Exchange represents that Users of the new
wireless connection would not receive Third Party Data that is not
available to all Users. In addition, the Exchange represents that Users
that do not opt to utilize the Exchange's wireless connections would
still be able to obtain Third Party Data through other methods, such as
from wireless networks offered by third party vendors, other Users,
through telecommunications providers, or over the IP network.
The Commission also believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act.\18\ All Users that
voluntarily select this service option will be charged the same amount
for the same services, and there would be no differentiation among
Users with regard to the fees charged for the service. The Commission
notes the Exchange's representation that the fees associated with
providing the wireless connections are reasonable because the Exchange
will incur certain costs, including costs related to the data center
facility, hardware and equipment and costs related to personnel
required for initial installation and monitoring, support and
maintenance of such services. The Exchange states that the costs
associated with the wireless connections are incrementally higher than
fiber optics-based solutions due to the expense of the wireless
equipment, cost of installation and testing and ongoing maintenance of
the network, and that fees also reflect the benefit received by Users
in terms of lower latency over the fiber optics option. In addition,
the Exchange believes that the proposed waiver of the first month's MRC
is reasonable as it would allow Users to test the receipt of the
feed(s) for a month before incurring any monthly recurring fees and may
act as an incentive to Users to utilize the new service.
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\18\ 15 U.S.C. 78f(b)(4).
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The Commission also finds that consistent with Section 6(b)(8) of
the Act the proposed rule change does not impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Act. The Exchange states that Users currently can receive Third
Party Data from competing wireless networks offered by third party
vendors, including at least four third party vendors that offer Users
wireless network connections using wireless equipment installed on
towers and buildings near the data center. The Exchange represents,
based on the information available to it, that the proposed wireless
connection would provide data at the same or similar speed, and at the
same or similar cost, as existing wireless networks, thereby enhancing
competition.\19\ The Exchange also notes that the proposed wireless
connection would compete not just with other wireless connections, but
also with fiber optic networks, which may be more attractive to some
Users as they are more reliable and less susceptible to weather
conditions. For these reasons, the Commission does not believe that the
proposed rule change imposes a burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.
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\19\ See supra notes 12 and 13 and accompanying text.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\20\ that the proposed rule change (SR-NYSE-2015-52) be, and it
hereby is, approved.
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\20\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-32817 Filed 12-29-15; 8:45 am]
BILLING CODE 8011-01-P